For people who run a family day care centre as a self-employed business in their own home

Deduction rules

If you run a family day care centre in your own home, you can choose whether you wish to claim a deduction for your actual operating expenses which you must document (accounts-based assessment) or whether you wish to receive a standard allowance per child in addition to the allowance for any personnel expenses, such as salary expenses, holiday pay and employer's national insurance contributions.

Standard allowance for day care centre running expenses (excluding salary expenses, etc.)

If you run a family day care centre in your own home and care for the children yourself, you can receive a standard allowance per child to cover your ordinary expenses linked to your childminding business in your own home. The standard allowance is intended to cover all expenses attributable to food, toys, trips, cleaning, lighting, heating, wear and tear on fixtures and fittings and home contents, etc. The standard allowance must amount to 50 percent of the childminding fee (i.e. the fee paid by parents plus the state subsidy). For 2016, the allowance is capped at 1,155 per month per child. The maximum rate for the standard allowance corresponds to the compensation rate for board, wear and tear, etc. as set out in the special agreement between the Norwegian Association of Local and Regional Authorities and the unions. You will receive the standard allowance for all the children at your day care centre, even for your own children if you pay the same amount as the other parents for having your children at the day care centre. The payment for your own children must also be declared as business income for the day care centre.

You can receive the standard allowance even if the children are cared for by others (an employee assistant) if you are responsible for administration, employer's responsibilities, etc. However, you will not be entitled to the standard allowance if you are not responsible for running the day care centre yourself, but simply make your home available as premises for childminding (host home).

If you choose the standard allowance per child instead of a deduction for your actual expenses, you will not be able to change your mind in subsequent income years if your circumstances do not change significantly and for at least five years if the family day care centre remains open for that long. 

In addition to the standard allowance, you will receive an allowance for expenses relating to salaries and holiday pay for an employee day care centre assistant and/or preschool teacher and for employer's national insurance contributions.

Example:

Standard allowance There are three children at the family day care centre, one of which is yours. All the children are two years old and stay at the centre for 40 hours. You pay a fee for having your child at the centre. No assistant is employed by the centre, as you are responsible for minding the children. You have appointed a part-time preschool teacher. The highest rate for employer's national insurance contributions is used in this example, but the rate generally varies according to where in the country the employer runs the day care centre business. The Norwegian Parliament determines the rates for employer's national insurance contributions annually.

Fees paid by the parents:  NOK 2,480 x 11 months x 3   NOK 81,840
+ state subsidy: NOK 164,900 x 3   NOK 494,700
= total income  NOK 576,540
- accrued salary, etc. for preschool teacher, including holiday pay    NOK 33,000

- accrued employer's national insurance contributions:

14.1 percent of NOK 33,000      

NOK 4,653
- standard allowance (2016 rate): NOK 1,155 x 3 x 11 months     NOK 38,115
= general income (taxable net income)  NOK 500,772

As a self-employed person, you must keep accounts in accordance with the Bookkeeping Act. You must complete Income statement 1 (RF-1175), which concerns self-employed persons with a limited obligation to keep accounts. This also applies when you opt for the standard allowance per child. The income statement forms part of the tax return for self-employed persons as a mandatory enclosure. This means that you must log into your tax return in Altinn.no and complete it electronically. Altinn is an internet portal (a shared website) for submitting official forms online. 

From the income year 2015 you must as a self-employed persons, submit the tax return electronically. You can not submit the tax return on paper and it is not available for downloading.

You will find the tax return with pre-completed information and all enclosure forms in your to task list at altinn.no. The Altinn solution will help you fill in the necessary enclosures, including Income statement 1, and transfer values between the forms.

RF-1030 is pre-completed with the information which the Tax Administration has concerning you either from internal databases or from banks, insurance companies, clients or employers and other public agencies. The pre-completed information largely concerns your personal circumstances. You must add information concerning your business circumstances yourself.

You only need to fill in a few items in the income statement. The childminding fees paid by parents must be entered under item 3200. Public subsidies must be entered under item 3400. The total of these two amounts must be entered under item 9900. Salaries and holiday pay must be entered under item 5000. Employer's national insurance contributions must be entered under item 5400. The standard allowance is entered under item 7700. The total of these expenses must be entered under item 9910. In a separate enclosure to the income statement, you must explain that it concerns the standard allowance for childminding in your own home, and you must also state the number of children and months concerned. Business income under item 9930 must be transferred to item 0401 in the income statement. This amount is transferred to item 2.1.3 of the tax return.

Tax return for self-employed persons etc. (RF-1030) and enclosures you submitt electronically to the Directorate of Taxes via Altinn. The deadline for submission is 31 May in the year after the income year.

Allowance for actual running expenses (Accounts-based assessment)

If you decide to claim a deduction for your actual expenses (accounts-based assessment), you must keep accounts in accordance with the Bookkeeping Act and retain receipts for the expenses you incur in running the day care centre. You must submit Income statement 1 (RF-1175) together with the tax return for self-employed persons. Income statement 1 is used by self-employed persons with a limited obligation to keep accounts and it is a part of the tax return for self-employed persons. This means you must log into your tax return in Altinn and complete it electronically. 

From the income year 2015 you must as a self-employed persons, submit the tax return electronically. You can not submit the tax return on paper and it is not available for downloading.

The tax return is pre-completed with the information which the Tax Administration has concerning you either from internal databases or from banks, insurance companies, any clients/employers and other public agencies. The pre-completed information largely concerns your personal circumstances. You must add information concerning your business circumstances yourself.

You will be entitled to an allowance for salary expenses which have accrued during the income year for day care centre assistants, preschool teachers, etc. You will also be entitled to an allowance for accrued expenses for holiday pay during the income year and employer's national insurance contributions.

Otherwise, you will receive an allowance for all other expenses that are attributable to running the day care centre, e.g. expenses for toys, food, trips, drawing paper, telephone expenses and added costs for lighting, heating and cleaning of the premises. As regards expenses for telephone, lighting, heating and cleaning, you must substantiate to the tax office that these expenses are directly attributable to the running of the day care centre and not private consumption.

If you run a family day care centre in your own home which is subject to tax-exempt assessment (i.e. where any rental income is not taxable), the amount that you can receive an allowance for is limited as regards your home.

If you incur expenses linked to areas which you use both for private purposes and for running the day care centre, there is no deduction entitlement for these expenses in the accounts. You will not be entitled to direct deductions for safety measures around the home or outdoors, even if they are mandatory, e.g. smoke alarms or garden fencing. The same applies to improvements to or maintenance of outdoor areas because such expenses are linked to the residential property. However, you can add these expenses to the cost price of the home (capitalised) if you subsequently sell the property.

You can claim a deduction under the rules concerning "home offices" if the expenses are linked to rooms which are exclusively used for the day care centre business, e.g. expenses for lighting, heating and cleaning. Instead of a deduction for your actual expenses attributable to the day care centre rooms, you can claim a standard allowance of NOK 1,700 per year (2016 rate). The rules concerning home offices do not apply if the children can use most of the home and you also use the rooms privately. You can claim a deduction for expenses that cannot be attributed to specific parts of the property, such as external maintenance, insurance and municipal taxes, in proportion to the relative rental values of the day care centre part and the residential part.

In connection with the purchase of miscellaneous equipment and furniture, the deduction entitlement is dependent on whether the objects were primarily purchased for the day care centre, e.g. children's chair, nappy changing tables, etc. If the equipment was primarily purchased for private use, any extra wear and tear associated with use in the day care centre may result in entitlement to a discretionary deduction.

Expenses for fixtures and fittings such as kitchen equipment, wardrobes, carpets and curtains are not deductible because they are considered to be attributable to the home rather than the running of the day care centre.

Example: Accounts-based assessment
There are three children in the family day care centre. All the children are two years old and stay at the centre for 40 hours. One of of the children is yours and you pay a fee for having the child in the day care centre. No assistant is employed by the centre, as you are responsible for looking after the children. You have appointed a part-time preschool teacher. The example uses the highest rate for employer's national insurance contributions. The circumstances are the same as in the previous example, but a deduction for actual running expenses is being claimed instead of the standard allowance per child. A deduction is being claimed for use of rooms in a private home for a day care centre under the rules concerning home offices.

Fees paid by the parents:  NOK 2,480 x 11 months x 3   NOK 81,840
+ state subsidy:  NOK 164,900 x 3    NOK 494,700 
= total income  NOK 576,540 
- accrued salary, etc. for preschool teacher, including holiday pay     NOK 33,000
- accrued employer's national insurance contributions: 14.1 percent of NOK 33,000 =  NOK 4,653
- standard allowance "home office" (2016 rate)   NOK 1,700
- expenses for food    NOK 17,000
- expenses for toys and trips  NOK 16,000
= general income (taxable net income)  NOK 504,187

You will find the tax return with pre-completed information and all enclosure forms in your to task list at altinn.no. The Altinn solution will help you fill in the necessary enclosures, including Income statement 1, and transfer values between the forms.

The deadline for submitting the tax return is 31 May in the year after the income year.

Minimum standard deduction

Normally, only wage earners can claim the minimum standard deduction from their income from employment, while self-employed persons do not receive a corresponding minimum standard deduction from their business income. A self-employed person who minds children under 12 years of age in their own home may still be entitled to the minimum standard deduction from their business income. This also applies to people who run a family day care centre in their own home. You will receive a minimum standard deduction regardless of whether you opt for the standard allowance for childminding or an allowance for your actual expenses (accounts-based assessment).

The basis for calculating the minimum standard deduction is the net operating income of the family day care centre, i.e. the centre's total income minus its actual expenses (according to the accounts) or the total income after deduction of the standard rate per child and salary expenses.